Shiba Inu Developer Funds Shibarium Alone Amid Sustainability Concerns
Shiba Inu's developer, Kaal Dhairya, revealed in an October 2 exchange on X that he personally funds Shibarium, a layer 2 blockchain for Shiba Inu. This funding model raises concerns about the network's long-term sustainability and its impact on the price of SHIB.
Shibarium is designed to make SHIB tokens scarce through a burning mechanism, where part of the fees collected are swapped into SHIB and sent to an inaccessible address. However, with only 2,288 transactions per day, Shibarium generates minimal fees, making it challenging for the network to sustain itself.
Comparing Shibarium's situation to that of Blast, another Ethereum network that shut down due to insufficient funding, highlights the vulnerability of layer 2 blockchains that rely on a single funder. If Dhairya were to stop funding Shibarium, the network's scarcity machine would be severely impacted, and its price would likely suffer as a result.
A calculation based on the burn rate shows that it would take around 5,700 years for 1% of the circulating SHIB supply to be burned at the current pace. This means that scarcity is not currently a driving force behind the price of SHIB.